Fed slashes rates to record low, zero to 0.25%

The Federal Reserve aggressively lowered its benchmark federal funds rate to a range of between zero percent and 0.25%, and said it would "employ all available tools to promote the resumption of sustainable economic growth."

Slashing the overnight lending rate by such a degree was an unexpected Fed move. Most everyone had expected a 0.5% cut from its prior 1%. The rate is now at its lowest level since the government started keeping records in 1954.

"It’s a highly unorthodox and creative step," Michael Woolfolk, senior currency strategist, at the Bank of New York-Mellon in New York told Reuters. "We think it’s the best possible move for the U.S. consumer and for the financial market."

The announcement was made by the Federal Open Market Committee (FOMC), who released the following statement: Continue reading Fed slashes rates to record low, zero to 0.25%

Consumer prices fall record 1.7%, inflation drops to 1.1%

Inflation for consumer products plummeted again during November as prices were pushed down again by free-falling energy costs. Consumer prices declined by a record level for the second consecutive month, the Labor Department reported Tuesday. The annual inflation rate is at 1.1% compared to the 3.7% increase in October.

The Consumer Price Index (CPI), the closely watched inflation barometer, fell in November by a seasonally adjusted 1.7% after October’s record 1.0% decline. Economists had expected a sharp drop between 1.3%-1.4%, which would have been a record itself. The latest figure marks the biggest decline since the government started keeping monthly data in 1947.

"This is scary stuff,” Mike Schenk, an economist for Credit Union National Association was quoted on MarketWatch. "We are teetering on the brink of a massive downward spiral. Deflation is a threat."

"I think we’re in a deflationary spiral that will probably go on until sometime next year," Thomas di Galoma, head of U.S. Treasury trading at Jefferies & Co. in New York was quoted at Reuters. "I think it will probably go on through the majority of 2009."

Falling prices is generally good news for consumers, but only to a certain point. Continue reading Consumer prices fall record 1.7%, inflation drops to 1.1%

Inflation rates and data updated for December 2008

US Inflation Calculator has been updated with the latest Bureau of Labor Statistics (BLS) figures released Tuesday, December 16 for the entire month of November.

The latest government report has November’s annual rate of inflation down to 1.1%, which is an enormous decline when compared to October’s 3.7%, September’s 4.9% and a rate of 5.4% in August.

On a monthly basis, the Consumer Price Index (CPI) declined 1.9 percent following October’s 1% decline. September was virtually unchanged while August dropped 0.1%.

The Inflation Calculator has been updated to use the latest figures for calculation, as have the following pages:

Consumer Price Index Data from 1913 to 2008

Current Inflation Rates: 1999-2008

Historical Inflation Rates: 1914-2008

Annual Averages for Rate of Inflation

For an in depth look at November consumer price changes, read Consumer prices fall record 1.7%, inflation drops to 1.1%.

 

Fed seen lowering rates toward zero without inflation worries

Greatly reduced inflation pressures and a desire to spark some life into the economy has almost everyone expecting the Federal Reserve to cut its benchmark overnight interest rate from 1% to 0.50%, marking the lowest level on records dating to July 1954.

Plummeting energy prices have taken the sting out of inflation since crude prices tumbled off their record peak near $147 per barrel in July — also when inflation was at its highest for the year. New York crude-oil for January delivery settled to $46.28 a barrel, falling $1.70 on Friday.

Consumer prices dropped a record 1% in October. The Labor Department reports on Tuesday the November CPI, which is the most watched government inflation barometer. Economists expect another record decline to 1.4%. Add in Friday’s report by the government showing producer prices fell to 2.2% and the Fed has an enormous green light to lower rates with little regard for inflation. Continue reading Fed seen lowering rates toward zero without inflation worries

Producer prices drop 2.2% in November

Producer prices fell sharply in November as energy prices plunged for the fourth consecutive month, the Labor Department reported Friday.

The Producer Price Index (PPI), which measures prices at the factory door and inflation pressures before they reach the consumer, fell steeper than expected to 2.2%. Economists had pegged a predictive 2.0% rise. The index registered its biggest monthly decline ever in October, falling a record 2.8%.

Plummeting energy prices again led the way in dragging prices down. The energy index fell 11.2% after a 12.8% drop in the previous month which set a 22-year record. Crude goods declined 12.5% following a 18.6% drop in October.

The consecutive declines further highlights free-falling crude-oil prices, which closed Thursday in New York at $47.98 a barrel — a far distance from its record highs near $147 per barrel in July when inflation peaked.

Continue reading Producer prices drop 2.2% in November

’12 Days of Christmas’ items now total $86,609

The price tag to purchase your true love each gift from the repeated verses of the fabled "Twelve Days of Christmas" carol is now an eye-popping $86,609.

Startling and dismaying for the romantic at heart — especially so considering the price has increased an astonishing $8,509, or 10.9%, over last year, according to the 24th annual “Christmas Price Index” compiled by PNC Wealth Management.

Similar to the Labor Department’s calculated Consumer Price Index (CPI), which is the most watched government inflation barometer, the tabulated PNC CPI offers insights into rising (or falling) prices and the economy. However, while the government’s annual CPI dropped to 3.7% in October, the PNC CPI registers at 8.1%.

The biggest price killer was the seven swans a-swimming, coming in at $5,600 and accounting for most of the increase. Should lovers "forget" the swans?

Continue reading ’12 Days of Christmas’ items now total $86,609